Financial Transactions and Reporting

Financial transactions and reporting entails monitoring and analysis of the flow of cash through your business. This could include transactions that occur internally, such as purchases as well as payroll and expense reports, as well as externally like rental and sales of assets; and credit-related transactions (e.g., loans and revolving credit, as well as cash advances). Financial transaction analysis is critical to ensure that your accounting records are accurate and reliable. This requires clear definitions and processes and a consistent regularly updated.

Internal transactions are those that occur within a business for example, the purchase, sale or rental of office space. They are also known as non-cash transactions due to the fact that they don’t involve the trading of goods or services in exchange for cash. These transactions could include social responsibility and donations, as well as other costs like PCard charges and travel expenses.

Non-cash and cash transactions are recorded in the financial system of record, which can vary from a basic accounting software to a sophisticated Enterprise Resource Planning (ERP) system. A solid financial statement is based on policies and procedures that ensure that only transactions that can be verified objectively are recorded in the system. This includes source documentation such as sales orders receipts, purchase invoices, bank statements, cancelled checks, promissory note and appraisal reports.

To verify the accuracy of an activity, you must first determine the account involved and determine where it will be debited and credited. Suppose, for example, that your business made the sum of $5,000 due to consulting services. To record the sale you must identify the income account as well as the receivables accounts, confirm that both are increasing and follow the rules for debiting and crediting. You must add the transaction into your journal entry to complete the process.

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